Legal issues still linger for development of

telco sector

In Myanmar, the Internet as a tool for growth

Q&A with Ooredoo’s Ross Cormack

New Telecom Services Bringing Modern Jobs to Myanmar

Issue 2 / June 2015

myanmar: all That matters

Moving Forward

diSCLaiMEr The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that

nCra delivers will be based on information gathered in good faith from both primary and secondary sources, the accuracy of which nCra is not always in a position to guarantee. nCra will accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

dear Members and Friends,

i would like to personally thank all stakeholders in Myanmar’s burgeoning business community for continuing to make this country a flourishing destination for foreign investment.

we at the Union of Myanmar Federation of Chambers of Commerce and industry (UMFCCi) work tirelessly to keep all businesses here well informed of economic and business developments that are taking place in order for you to better position your companies in a manner that allows you and our country to continuously evolve and prosper.

as we continue to focus on Myanmar’s economic development, we are delighted to bring our members the country’s first all-encompassing suite of business publications and industry analyses: Myanmar Market intelligence – a family of reports that comes to you at no cost, starting with this inaugural flagship product, the quarterly UMFCCi Myanmar Market intelligence report.

By making these products available to our members and global investors, we hope that its content generates a more transparent view of the ever-evolving business environment in Myanmar, as well as acts as a catalyst for greater business-to-business collaboration both domestically and across borders.

as Myanmar continues to modernize and take a leadership role in the region, there will be many challenges ahead; however, we stand firm in our resolve to assist our members and to promote this country as an emerging market brimming with opportunity.

in closing, we would once again like to thank our members for their continued support, and to thank new Crossroads asia (nCra) for producing this range of publications that provide an informative and actionable overview of Myanmar’s economic re-emergence.

Sincerely,

U win aungChairman of UMFCCi

Chairman of UMFCCI

in conjunction with:

Presented by:

Con

tent

sPublisher NCRA

Editor-In-Chief Philip Heijmans

Senior Staff Writer Shine Zaw Aung

Design & Production Jason T Quirk

The Pulse: Telecoms thr iv ing, but chal lenges remain4

News in Br ief6

Khine L in: Making my way in Myanmar15

On the Ground: Is issuing a fourth l icense bad for business?19

Legal Corner Presented by DFDL13

Making i t work: The Internet as a tool for growth7

In the Spotl ight with Ooredoo’s Ross Cormack16

Myanmar’s Mobi le Revolut ion8

Telcos by the Numbers12

Event Calendar20

New Crossroads Asia20B Thitsar Garden, Kanbe Road, South Okkalapa, Yangonwww.NewCrossroadsAsia.com | Information@newcrossroadsasia.com

UMFCCI29 Min Ye Kyaw Swar Street, Minglartaungnyunt, Yangonwww.umfcci.net

ThE PULS

Mobile Penetration in Myanmar (2014-2024e)

Source: NCRA Analysis

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2014   2015e   2016e   2017e   2018e   2019e   2020e   2021e   2022e   2023e   2024e  

Mobile  Penetra8on  rate  %   As  of  Discrete  Users  

when state-run operator Myanm ar Po s t s and Telecommunications (MPT)

launched the country’s first mobile services in 2000, a SiM card could cost more than $5,000 on the black market, an unthinkable amount to a population where gross income per capita was less than $100 per month.

at the same time, telecommunications were tightly controlled by the government, which held a monopoly over the sector, and viewed mass communication as a potentially destabilizing force for the country.

Though the cost of SiM cards would later shrink to about $200, mobile penetration in country of 51.4 million would remain low at just 7.08 percent as of July 2013, according to government data.

oh, how the tides have turned.

as a part of an ambitious plan by the reformist government to open the long-

isolated country to foreign investors and bring the country into the digital age, the Ministry of Communications and information Technology invited Qatar-based ooredoo and norway’s Telenor in 2013 to become the first wholly foreign-owned operators following an arduous tendering process.

on august 15, ooredoo became the first of the two to launch services in Yangon, Mandalay and naypyidaw, and overnight the country went from the least connected market in asia to one of the fastest growing in the world.

“Mobile phones are now part of the background infrastructure for a range of industries, facilitating market access and pricing, to financial services,” said Sean Turnell, an expert on the economy of Myanmar at Macquarie University in Sydney, australia. “Much of their impact is hard to delineate, but we might expect all sorts of efficiencies within existing industries, as well as some new ones.”

within one month of launching services, ooredoo announced that it had already reached more than 1 million subscribers. increased mobile usage this year meanwhile would help popular mobile messaging service viber become the most popular application in the country, growing from less than 2 million users in February to 5 million as of July, the firm announced during a press conference in Yangon.

ooredoo, who have pledged to spend $15 billion on telecommunication services in Myanmar over the course of their 15-year license, has said they expect Myanmar’s mobile services to reach 97 percent of the population within five years.

The high levels of investment have seemingly paid off and subscriber numbers have grown exponentially, with Telenor and ooredoo hosting 6.4 million and 3.3 million users respectively.

The MPT has already begun its own expansion after announcing a partnership with Japan’s second-largest wireless carrier Kddi Corp and Sumitomo Corp in July. The firms said they would invest about $2 billion to expand the existing network. after moving forward with a rebranding campaign, they claim to now have 9.3 million users.

on the back of greater mobile and internet reach in Myanmar over the

last year, a number of locally developed applications have already sprung onto the market and their successes have spurred vast amounts of investment for further integration.

Similarly, the size of Myanmar’s domestic internet – the number of companies and organizations who are hosting websites inside the country – has tripled. in September 2013, the number of locally hosted websites or domains was 300. By September 2014, the number had jumped to 900 and by november it had surpassed 1,000.

Still, Myanmar has a long way to go before it catches up to its neighbors in aSEan and stands as last in the region with regards to mobile penetration. Laos, which has the second lowest mobile penetration rates at around 50%.

Though the economic gains stemming from an improved telecommunications infrastructure are undeniable, the rapid growth of mobile users on social media websites has exacerbated deeply seeded sectarian problems and has in at least

aDVErTISE WITh US

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+95 1 122 1673 or information@

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two instances last year resulted in deadly clashes between radical Buddhists and minority Muslims.

ross Cormack, CEo of ooredoo Myanmar said last year that educating social media

users about exercising social norms was imperative to prevent further violence.

“our standard way of doing business and our conditions [of usage] say that you have to behave with social norms, while obeying country laws and that’s how we expect people to play,” he said, adding that his firm has met with regulators to convey that very message.

a senior official from the state-run MPT, who requested anonymity as he is not authorized to speak to the media, said the government is committed to dealing with the problem in a way that would not compromise progress made to recently liberalized speech freedoms.

“we have to think responsibly. we are an accountable people and the government is in the delicate position of changing its mindset about freedom of speech and

it is doing so slowly, not abruptly,” the official said.

“i hope we will be able to better prevent this kind of thing from happening again the future with effective internet and media controls where it is necessary. we have to manage it.”

Part of the problem is that there is currently no legal framework in place that governs behavior on social media, while inefficiencies in law enforcement still persist in Myanmar, consulting director at new York-based advisory firm deloitte, who advises the government on developments in the telecommunications sector, Christopher Chit Tun, said last year.

The government is writing and revising several by-laws in the telecommunication sector, although ratifying or implementing some of them has been delayed. For instance, the laws governing legal intercept of communications have not yet been drafted or published for consultation. The regulators have given no clear indication of when this will happen.

Myanmar’s telecoms sector thriving, but challenges remain

In September 2013, the number of locally hosted websites or domains was 300. By September 2014, the number had jumped to 900 and by November it had surpassed 1,000.

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nEwS in BriEF

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SiM card sales soar as telecommunications sector heats upThe number of mobile phone SiM cards in Myanmar, which has more than 51 million people in it, has shot up to more than 18 million from around one million just three years ago, according to data compiled by reuters.

Major tower player Myanmar Tower Co. up for sale: local mediaLocally based telecommunications tower provider, Myanmar Tower Co., is reportedly up for sale and has taken a first round of bids for a full trade of its contracts and assets, according to local media. The company, which is owned by digicel asian holdings, a joint venture between Caribbean-based digicel group and local conglomerate Yoma Strategic holdings Finance,

signed an agreement in 2013 with ooredoo to develop, construct and lease 1,250 telecommunications towers.

Local telcos scrap 5% tax on top-ups as criticism growsMyanmar mobile phone users will no longer have to pay a 5 %t tax on top-up cards from June 1, the country’s telecommunications ministry announced. according to local media, the commercial tax was actually passed last year, but not enforced in an effort to promote modern telecommunications services to the general public. Last month, the government announced it would impose the tax, but then quickly reneged on the plan. The number of mobile phone SiM cards in the country of 51.4 million people has grown to more than 18 million from around one million just three years ago, according to data compiled by Reuters.

apollo Towers Myanmar buys 700 new telecom towersapollo Towers Myanmar Ltd. has announced that it has signed a new purchase order of more than 700 new telecom towers with Telenor Myanmar Ltd, according to a report on Business wire.

ooredoo Myanmar to get new chief executiveooredoo has appointed rene Meza as the new CEo of its Myanmar business, replacing ross Cormack who has taken the decision to leave his position later this year. Meza currently holds the position of managing director of vodacom Tanzania. Meza has more than 17 years of international experience in emerging markets having held leadership positions in telecoms businesses in asia, africa and Latin america.

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imagine a tech company that just launched a social network for university students. The CEo is a

dropout who wears checked shirts, thick-framed glasses and woolly socks. Employees get remote working and unlimited vacation. Blackboards in the office are chalked with motivational quotes.

This tech company is not Facebook, or Yahoo. Perhaps the guard in a longyi, or Burmese sarong, at the bottom of the stairs gives it away. This is the Yangon headquarters of nex, a digital start up

founded by 24-year-old entrepreneur Ye Myat Min.

he’s just one of dozens of young developers muscling in on Myanmar’s mobile revolution, waging a daily battle with infrastructure woes, distribution hiccups and internet speeds more than 30 times slower than Silicon valley’s.

none of that phases Ye Myat Min, a tech addict and early adopter. “we’ve used Slack since Slack launched – we were one of the first few customers,” he said in a recent interview, referring to the slick

workplace chat service taking on gmail.

nex’s main product is hush, an app that allows users to post anonymous messages in the same way as Yik Yak, a US social network that grew so popular it was banned on some campuses. Some 7,000 active users – mostly students – have penned lengthy threads on everything from classroom crushes to opposition leader aung San Suu Kyi since it launched late last year. The start-up secured a second round of funding worth $150,000 in november.

Photo Credit: Phandeeyar

it’s a surprising development in a country where, until a few years ago, apps barely existed. The old military-run government put such a high price on SiM cards – upwards of $2000 – that cellphones were off limits for the vast majority. But since liberalizing reforms allowed telecommunications giants ooredoo, from Qatar, and norway’s Telenor to enter the market in 2014, the price has fallen to $1.50.

an estimated 18 million people now own cellphones according to data compiled by reuters, while android smartphones can

be bought for as little as 30,000 kyats (about $28). More than one hundred new apps have been created to satiate the demand for content. “So many crap apps,” said Ye Myat Min. “To be honest, there are only about 20 to 50 good ones.”

among the most popular, according to developers, are reading and education apps as well as games with a local twist, featuring Myanmar settings or cartoon characters.

viber has quickly become the leading messaging service, claiming more than

five million users. But other international players like Btalk and Line are advertising aggressively and MyChat, a localised chat app which allows users to talk in Myanmar language and share stickers featuring well-known celebrities and cartoons, has close to one million downloads.

MySQUar, the entertainment platform behind MyChat, is set to list on London’s aiM stock exchange later this year.

“it’s a remarkable thing – about 51.4 million people, most of who have not

With new digital technologies, young entrepreneurs are making a splash

By: Poppy McPherson

Myanmar’s mobile revolution 9

really accessed the internet before, are now coming online very quickly,” said david Madden, an australian entrepreneur based in Yangon.

Madden is the founder of Phandeeyar, an innovation lab launched late last year that aims to support digital startups. on a recent afternoon in the downtown offices, Thiha aye Kyaw, a young developer, explained how the sector has evolved.

Three years ago, most graduates with

tech skills went straight to Singapore

where the market was more promising and salaries, at an average of $2000 per month, were as much as four times the maximum in Yangon.

“now things have changed – once they get experience they see more opportunity in coming back here,” he said.

while some of the barriers to doing business in the sector have started to fall away, serious challenges remain.

despite rapid expansion by telcos, internet speeds remain sluggish. a series of speed tests conducted by Madden over the

space of a month in Yangon showed an average of less than 2 Mbps. improvement is unlikely without liberalization of the internet service provider market, he said.

Then there are technical flaws. There’s no standard font for Myanmar language, so most people use one of two: Zawgyi, the

original, most popular option, or Unicode, which is supported by google. according to Ye Myat Min, that’s part of the reason why hush is English-language only.

distribution is a further headache. huawei phones are hugely popular in Myanmar but google Play, the app store for android, is not compatible with some Chinese models. Locals use hacks like the file-sharing service Zapya, while

producers try methods like deals with phone shops to install their app as part of ‘bundles’ on the device.

But the most urgent problem for many developers is monetization. due to international sanctions restricting payments to the country, consumers are unable to download paid apps from google

Play Store. Even if mobile payments were allowed, most of the population remains unbanked.

That’s not a problem for social networks like hush, which plans to raise revenue through advertising, but for people like Myo Myint Kyaw, who heads up revoTech, which produces paid education app, it’s a

big one. “we’re losing too much money with that,” he said.

Solutions have ranged from the sale of USB sticks with apps pre-installed to collaboration with telcos. The problem with the latter is the potential for international firms gobble up most of the profit.

one developer has created a Myanmar app store allowing customers use scratch-cards bought from local shops to download apps. when the store, named dinga, launches next month, it will take a cut of around 30% of the price of paid apps.

But htoo Myint naung, the store’s founder and CEo of Technomation, one of the longest-running app development firms, is worried about piracy. Copied products spread widely and there’s concern that free software will supersede the official route.

it’s a gamble all round. Myo Myint Kyaw gave up a corporate job in Singapore to start revoTech. Ye Myat Min dropped out of university for nex. htoo Myint naung has poured the profits from previous ventures into his new app store.

he’s worried, he said, but what’s the alternative?

“we can’t just sit in the corner, being scared in case it doesn’t work.”

Image Credit: Hush

Photo Credit: Phandeeyar

Photo Credit: Phandeeyar

“It’s a remarkable thing – about 51.4 million people, most of who have not really accessed the Internet before, are now coming online very quickly,” — David Madden, an Australian entrepreneur based in Yangon

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with the streets in every township in Yangon and other urban centers across

Myanmar seemingly awash with the red of ooredoo and the blue of Telenor, it would be easy to think that the newcomers who launched their mobile networks late last year were sweeping the state-owned incumbent MPT away in a tide of new investment, cheaper prices and private sector marketing knowhow.

in fact, this expected outcome has not yet happened as MPT, with its historic reputation for poor service and e x t o r t i o n a t e p r i c e s , h a s r e p o r t e d l y d o u b l e d i t s subscriber base in the 6 months to January 2015 and in moving quickly to hook up with Japan’s mobile operator Kddi and the Sumitomo group, it has hit back smartly with a big reduction in prices, expansion of its already large network and other improvements in its services.

The fight is on and it can only be the consumer that wins in a three-cornered fight - the fourth licensed operator, local company Yatanarpon, with a mix of state and private ownership, has been dallying with various potential foreign partners but is yet to announce a deal, leaving it trailing dangerously behind the other operators.

while the new operators are making confident announcements about the progress they are making, how are they coping with the challenges that face foreign investors in doing business in Myanmar? These are well-known

Legal issues still linger for development of

Myanmar’s telco sectorBy: Nicholas Towle

Legal advisor with DFDL.

by now, mainly due to the decades of isolation and the need for rapid catch-up in the legal and regulatory arena – doing things “the Myanmar way” is not an option for investors with compliance requirements imposed by their home country governments and regulators.

at the same time they have shareholders who expect quick returns from such an open and attractive new market, but who

also have to be seen to be culturally and socially responsible. The

experience of investors who have a single-

site project, such as a hotel, factory or brewery, is of big challenges in every facet of implementing the project. For the telecom operators a n d t h e i r

tower company s u b c o n t r a c t o r s ,

who have to build out huge networks across the

country to meet aggressive coverage targets set in their

licenses, these challenges are multiplied many times over. They include:

Licensing issues – while Telenor and ooredoo were issued their operating licenses in January 2014, the tower companies had to wait for theirs until late 2014 when the licensing rules under the Telecommunications Law of 2013 were finally issued. in the meantime they were operating in a regulatory grey area, making their owners and finance providers very nervous – and the Ministry of Communications and information Technologies (MCiT) has not yet issued all of the rules and regulations required to be issued under the Telecommunications Law, leading to continued regulatory uncertainty in key areas.

what Myanmar’s new telco operators are up against in 2015

Construction permits - every new building and structure to be erected in Myanmar requires a construction permit to be issued (in the case of cities) by the relevant city development committee and in rural areas by the local administration up to regional and even state level in some cases. This is a long process, and the government has so far not been able to arrange for a ‘blanket’ permit to override the need for individual permits in each case. Some tower companies have had to rely on letters of ‘no objection’ from village and town chiefs to give the go-ahead for construction and this is not a satisfactory legal basis for the future

Change of use approvals – this is particularly relevant to farmland in rural areas, where change of use is subject to a process involving the local, regional and central Farmland administrative Bodies, again a very time-consuming process and no central solution to this has been agreed by the government, despite pressure from the industry

Other issues – there are other problems faced by operators and tower companies, including the problem of registering their tower site leases of more than 1 year due to the refusal to register those long leases by the registrars at the office of registration of deeds, despite the MiC permit. all legal dispositions of land are required to be registered to make them valid against new owners or holders of mortgages over the land, and the risks are clear

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MAkINg My WAy INMyANMARw

hen i would come back for my annual visit to my home country of Myanmar every

year during my undergraduate years, i got the sense that everything here was more or less the same and not ready for a change.

all along the streets, mobile phones were a rarity and internet access even more so. People were living in the past. That is until last year, when the reforms everyone was talking about became very apparent to me.

SiM cards costs have decreased from $1,500 to $1.5 and mobile internet became far more stable and faster over time. The roads meanwhile are now jam packed with different imported automobiles and it was easy to see that the past was behind us.

That is when i decided to take a leap of faith to come back for good and have my own technology startup – to participate in the change that was happening.

with three main telecom operators in Myanmar, competition is on the rise and each operator is in a constant state of improvement as a result. Today, the average mobile internet speed is about 500KB/s and the mobile penetration is at about 20% and growing.

This change has opened the door for entrepreneurs like me to make a game-changing tech startup.

i co-founded an online restaurant guide named MyLann with two other co-founders in august 2014. we were inspired by the success of Yelp in the US. Things were very difficult in the beginning due to many factors as restaurants owners did not understand our concept nor wanted to give simple data such as opening hours, menu items, price range, etc.

Mobile applications had a hard time succeeding in general because of sluggish internet connections that were barely averaging 10KB/s. The architecture of those applications greatly relied on offline data, resulting in huge application size. downloading apps from google Play Store and apple Store were completely out of the question – apps were being shared through a p2p transfer app called Zapya and being installed at physical mobile shops that cost $3 in installation fees.

But, we tried our best to gather restaurant data in Yangon and forged good relationships with restaurant managers and owners and things began to evolve for us. within three months, our database grew to about 600 restaurants in Yangon and while mobile data got faster and more accessible.

More and more people gained access to internet, became more familiar with apps and MyLann was able to deliver the

right message of our brand to people and restaurants. our business became easier.

nowadays, people know how to download apps online and how are better able to get more acquainted more easily with how they work. They are also willing to spend more on them – with the average person spending $30 to $50 per month on mobile data.

This will make the lives of internet businesses like ours a lot easier as we can now better market our products. Telecoms companies are trying their best to cover even more areas in the country too and a younger generation of people are finding new opportunities to thrive as business owners in this fast-growing internet industry.

This excites me to grow MyLann more to have a better impact on society, while building a well-rounded directory guide powered by user-generated reviews and data.

indeed, things are looking up in Myanmar.

Once considered an unlikely job in Myanmar, becoming CEO of your

own tech start-up was the last thing anyone expected to become. With modern

mobile services here to stay however, a youthful vigor among the masses bent

on furthering connectivity has spawned an elite group entrepreneurs ready to take

advantage. Enter, Khine Lin, founder of the popular,

local mobile restaurant directory guide MyLann.

oP-Ed

Khine Lin graduated from Lafayette College and has 3 years of experience with various technology companies including Epic Systems, Wayfair.com and Vizy. He has been working on several tech startups and IT projects as a freelance software developer.

Land ownership and titles – with their permits from the Myanmar investment Commission (MiC), the foreign operators and the tower companies can lease land for tower sites on a long term basis free of the 1-year restriction that otherwise applies for foreigners. however, land in rural areas is almost all classed as farmland which is subject to land use rights (LUr) issued by the government under the Farmland act of 2012. Many

farmers have not yet applied for these LUr and therefore proving title has been difficult and in many cases reliance is being placed on the old certificates that preceded the LUr.

in addition, while the lease of land subject to these LUr is possible under the new law, lease of LUr to foreigners (including foreign-owned tower companies) requires the separate approval of the government. This obligation may be satisfied by

obtaining MiC approval for each lease, as required under the MiC permit, but this is not clear.

indeed, many of the challenges faced by the telecom companies in building their networks remain unresolved. however, the good news is that the telecom sector regulator, the Posts and Telecommunications department of the Ministry of Communications and information Technology, is working with the companies to find workarounds and solutions to these issues and the rollouts continue apace.

The telecom companies are confident that they will meet their coverage targets despite the problems, which is good news for all consumers of their services, who are increasingly enjoying their new world of mobile 3g internet, blissfully unaware of the enormous challenges and the efforts of their providers in bringing the world to their phones.

Nicholas Towle is a Regional Senior Adviser at DFDL. He has been a corporate and commercial lawyer with 20 years of experience working for major law firms in the UK, including 12 years as a partner in the corporate departments of three US and UK law firms.

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The telecommunications sector is off and running, drawing millions of new subscribers who have never owned a mobile phone. With smartphones now cheaper than ever, data users are also

up and new industries have arisen, with a burgeoning internet technology sector

making waves, but new opportunities have led to new challenges. All That Matters sits down with Ooredoo CEO Ross Cormack

to discuss everything telecommunications, from digital markets to privacy and beyond.

By: Philip Heijmans

With almost a year under your belt, how would you characterize Ooredoo’s success in Myanmar?

it’s been a tremendous experience and it has really vindicated the 3g strategy we launched with. Everyone is data hungry. Everyone wants to stay in touch with their friends and be on social media. So whether they are younger or older, there is something for everyone on the internet.

One of the most impressive aspects of the market has been how quickly entrepreneurs are coming out of the woodwork to tap digital markets. What has impressed you the most with regard to new applications and services being offered through electronic devices?

i’ve been fascinated by all the different mobile payment solutions people have been dreaming up. we’ve been trying to foster it with Sule Tech and that’s bringing entrepreneurs together with start-up funding. what we’ve done is try and bring an eco-system of professionals who know how to use apps and to give them space to develop.

i’m not surprised [by how the market is responding though]. it was a country that was closed for a long time and people didn’t really share information. a lot of comes from access to the internet.

How far along is Ooredoo to achieving nationwide coverage? Which areas do you plan on covering in the new fiscal year?

growth in the country has been faster than we expected. it’s fantastic. when we launched, we covered less than 20 percent, but at the end of last year we increased our coverage significantly to 35 percent and expect to achieve 75 percent by the end of this year. Moreover, we had about 1,000 towers beaming at the end of last year and expect 4,000 and the end of this year.

one of the things that has helped growth in telecommunications is expectations. Telecoms is an infrastructure and provides the basis for other infrastructure. For every 10 percent increase in penetration, you get 2 percent growth in the gdP.

Are there any areas where you might experience a delay in launching services?

we were learning as we were building, but so were the government, townships and villages. it was a complicated process, but we’ve had a bit of time to deal with some very human and geographic issues. we were building in monsoon season and ran out of steel, so there were areas where that was the case, but now that the machine is moving a bit, we have coverage there now.

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What about in conflict areas?

we’ve already dealt with local authorities, interest groups and armed groups and the skill in this is to ask them what they want. This was a real issue where we were stopped from building and then met with them and engaged them at very high levels and even at grassroots levels and now they are happy campers.

Now that services are up and running, what do you consider to be the biggest challenge for the telecoms sector moving forward?

it’s about opportunities rather than challenges. as we go in to the rural areas people will be price conscious, especially over handsets, so a priority for us will be to see people who can provide low cost handsets to everyone. we’ve already brought them from down from $140 to $40. The challenge is to bring that down to $20.

The second challenge, which is also an opportunity, is power. we made assumptions about power in areas including cities. it takes longer to access the grid than we thought. The grid is not functioning the way everyone would like and it was a challenge

In what aspects would you consider Myanmar a unique market for telecoms services? What about the way the population absorbs new mobile and data access differs from the rest of Southeast Asia?

i have to say that because of the relative youth of the banking system, the financial transaction is a more interesting challenge. in the early days, when we paid families we had to pay cash because this is what they expect, but we’ve persuaded everybody to open a bank account. Still

a lot of the third party transactions are more complicated.

also, we import a lot of things priced in USd and we are earning kyat so the exchange rate, which has fluctuated widely recently, is subject to fiscal controls as the government tries to control the amount of dollars available.

How about in terms of revenue. At what point do you expect to see a turnaround on your investment here in Myanmar?

it would be normal to turn an operating profit on all ordinary operations after 18 to 24 months and the net profitability would be 3 to 4 years later. we’re in heavy investment mode for the next couple of years. we’ll have more heavy investment in 4g in the next few years. at that stage our relationships through distributors around the country should be working beautifully.

What about in terms of corporate social responsibility? Myanmar is in the midst of a large political transition and various factions are prone to use this new technology to advocate for causes or spread messages that could be deemed unacceptable. What is Ooredoo doing to confront this problem?

There is a focus on health and we’ve done several different things, but the principle thing is we’ve built two 4 wheel drives through partnerships. Pact will go into townships in Sagaing and Mandalay regions with the mobile health clinics and probably be the first healthcare that has arrived in those village.

we’ve also done other local things -- teaching children lessons through monastic schools and utilizing telecommunications. Part of that program

is to provide free internet to 55 libraries in the main cities.

How do you interpret the regulations concerning information requests by the government for lawful intercepts? How do such regulations differ from other countries Ooredoo operates in? harsher? stricter?

no, they are not stricter than in other places. it is lawful intercepts people are considered about and whether they are lawful. There has to be a legal reason to support any request by the authorities and they have taken the advice of the world and EU. we’ve been in countries where we’ve seen much harsher requirements and it’s something we can develop over time.

People here are being very careful. They know the country is changing and know we are operating under a framework and through the path of the regulator -- i’m not aware of any transgressions. in some other countries it’s rather very rigorous and intrusive, but here it isn’t.

How will Ooredoo tackle privacy concerns and balance working in a country where due process and the rule of law is relatively weak? How about with regards to political unrest on social media?

we can’t tell people how to behave, but we ourselves can show people how to behave, so we respond to even the rudest inquiries. To be honest, it is just like any country, when they get excited you can see the trend of growing social media.

we regard -- very securely -- people’s personal information and data records. Those are sacrosanct and that’s how we do business.

in 2013, when Myanmar’s government issued new telecommunication licenses, market landscape seemed

clear: two newcomers will compete with the existing government monopoly. Since then, the government has been pondering whether to issue one more license to a fourth operator. The consideration process has been lengthy and rife with leaks and rumors, but it seems certain now that a fourth operator will join MPT, Telenor, and ooredoo by the end of 2015. This could end in tears.

For most of the previous decade, having four mobile operators was the norm in many countries. regulators were wary of having less than four, fearing prices might go up otherwise. however, times have changed. internet services, such as voiP and mobile instant messengers, have thinned mobile operators’ margins. in many countries, third, fourth, and subsequent operators are underperformers. having too many operators also leads to price wars and subsequent underinvestment in infrastructure.

a consolidation is underway. Sprint and T-mobile, america’s perennial third and fourth carriers by marketshare, considered a merger in 2014. while this was soon abandoned after regulatory concerns, industry insiders believe a deal is inevitable.

The European Commission, which has long been skeptical of telecoms mergers in the EU, has also been relenting. in 2014, it gave permission for Telefónica to take-over german operator E-plus – the first time the operators are reduced from four to three competitors in a large EU country. The UK went from five network operators to four in 2010, and is now en course to reduce that number to three if orange and Three merge. regulators are likely to approve that deal as well as a merger between Jazztel and orange which will also reduce the number of operators in Spain to three.

By trying to issue a fourth mobile operator license,

Myanmar flouts global trends Shine Zaw Aung

A commentary from the NCRA’s chief analyst

involved, while proposals to have this new operator as a public company have also been considered.

The new company will now have to complete not only with the market leader MPT but also with ooredoo and Telenor. The latter two now have early mover advantages: they now have between them ten millions users, thousands of towers, and qualified local and foreign staff. Yatanarpon is currently a domestic provider of internet services and fixed-

line telephony, but lacks nationwide infrastructure, cell towers, knowhow, and a large workforce. it will struggle to catch up with three existing players, and international experience shows that laggards never truly catch up in telco industry. in its typical plodding fashion, Myanmar’s telco authorities may have already missed a chance to have a competitive fourth operator. had they issued a fourth operator license at the same time as to ooredoo and Telenor, it might have been able to compete. now, it might be too late.

Similar calls for consolidation ring throughout asia too. after a wave of consolidations in 2008, China has only three mobile telecom operators (all state-owned). india’s fractured telecom market is set to consolidate through takeovers, spectrum trading and sharing, especially after a recent new spectrum auction where four operators won 85% of new spectrum on offer. in 2013, indonesia claimed that 92% of its telco sector’s revenues come from just three operators; the ministry officials in indonesia have encouraged the companies to merge.

The situation is a little different for Myanmar where a large population is unphoned, and there remains a large niche for a potential fourth operator to fill. Yet, there is confusion over what

form this operator should take. when two licenses went to operators with 100% foreign ownership, parliamentarians lobbied to have two licenses set aside for local operators. however, now with MPT in a Japanese joint venture, ‘locally-owned operator’ debate seems moot. The government looks towards vietnam’s military-owned viettel for a partnership in the fourth operator, while uncertainty remains over how the domestic side of the operator should be structured. Yatanarpon Teleport and military-owned MEC are likely to be

on ThE groUnd

In many countries, third, fourth, and subsequent operators are underperformers. Having too many operators also leads to price wars and subsequent underinvestment in infrastructure.

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Myanmar Hospitality &

Tourism Conference

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2nd Food and Hotel Exhibit

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Myanmar Phar-Med Expo 2015

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6th Myanmar Oil & Gas

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Myanmar EPower 2015

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Global Water Conference

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Builders Myanmar

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Auto Expo Myanmar

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Real Estate Show, Yangon

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Myanmar Green Energy

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EvEnT CaLEndar

with a population of 51.4 million, Myanmar is one of the last, and largest final frontiers for

internet connectivity.

The recent opening-up of its economy has resulted in an explosion of people coming online who are demanding better and more cost-effective coverage. as a result, the market has experienced rapid growth as telecommunication firms furiously build their cellular network infrastructure.

This technological revolution has spurred global interest in Myanmar and the introduction of telecommunication conglomerates into the country. in 2013, 91 firms pitched for the business to pave the technological way into the future, two were awarded the rights with 15-year licenses.

with the infrastructure development underway so came the users. in 2014 the total number of mobile phone users in the country reached 14.8 million, with mobile internet users exceeding 2.6 million. around 350,000 SiM cards were sold every month, with approximately 20% of users accessing the internet.

That number is expected to keep growing and by the end of 2015, 38.5 million mobile phone users will be online, with the Ministry of Telecommunications and information Technology seeking to increase internet connectivity to 50%.

Connection has driven the desire for content, which is how MySQUar came into being. we created the firm with the intention of enriching the lives of the Myanmar people, through deep, accessible and rich online experiences. Since that

time we have immersed ourselves fully in the market and witnessed a great number of developments and improvements in the technology sector.

Businesses are now extending their reach locally and internationally and individuals are using their new found connectivity to boost their ability to generate income. Facebook is a popular channel many employ as an online store selling everything from clothing to medicine.

others, meanwhile, are building on ideas that have proven successful in other markets and are creating entire products online, such as ticket sales for tours throughout Myanmar and websites for retail commerce.

This surge in new products and businesses has meant an expansion of the job market, with a growing demand for talented individuals such as coders and designers.

at the same time, growing connectivity has meant resulted in an explosion of bloggers, who comment on all aspects of society, from politics to romance to education. Youth especially are experiencing a rapid shift to the online world, sharing with their friends via social media and being continuously connected for constant online communication.

The people of Myanmar are hungrily devouring content and apps, especially those solely catered to them. That’s why creating content specifically for Myanmar is so important and every user, street interview and focus group reinforces the need for greater innovation.

MAkINg It WoRk:

The Internet as a tool for growthBy Daniel Campbell

20%Of users accessing the Internet

350KSIM cards sold every month

14.8 Moblie phone users in 2014

million

Daniel Campbell is General Manager at MySQUAR. Founded in June 2013, MySQUAR is one of the first local language, social and entertainment companies in Myanmar.

CoMMEnTarY2021

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PUBLiShEr’S noTE

dear readers,

First and foremost, we at new Crossroads asia would like to thank the Union of Myanmar Federation of Chambers of Commerce and industry (UMFCCi) and its board of directors for giving us the exciting opportunity of bringing to you our newest suite of reports, Myanmar Market intelligence.

without your foresight and effort to bring the Myanmar business experience to both domestic and international businesses and investors, this product would never have been conceived. we are truly proud to have been selected to showcase the tremendous growth and opportunities available in Myanmar through this important project.

The speed at which change has occurred in Myanmar since the time i moved here three and a half years ago has been staggering, both in the reforms that have taken place, and the significant growth of business activity that is being witnessed on the ground in many sectors of the economy.

we hope that this suite of Myanmar focused reports will serve to educate and propel interest in Myanmar as a true asian business destination. The goal in publishing these products will be to give the reader the tools to develop a thorough understanding of the local business landscape and adopt a fresh insight into an emerging market that is little known.

The products you will be seeing in the coming months will comprise content featuring all aspects of the local marketplace, in both a macro and micro context. in addition to our written content, our products will also contain more than three years of nCra’s proprietary market data, allowing decision makers to make well informed investment choices.

You the reader will be given the opportunity over the next year to read three publications we will be publishing:

The flagship publication, the Myanmar Market intelligence, will provide readers with a bird’s eye view of foreign investment laws, macroeconomic trends and over the course of a year, a comprehensive review of the top sectors that are significantly important to Myanmar’s economy. This publication is to be release on a quarterly basis.

our Myanmar: all That Matters publication is a monthly thematic review of a chosen sector that looks at the relevant macro trends affecting business and the ancillary knock on effects they have on the service sector and beyond.

in addition, we will be publishing Business Update, which is a weekly review of all business news that affects foreign direct investment. This publication will highlight the most significant news stories so that the reader can stay abreast of how the domestic markets are evolving.

we wish to work with all constituencies in creating a more transparent marketplace and your support and feedback is imperative in order to make this product even stronger in the future. we welcome any and all of your feedback.

in closing, we once again would like to thank the UMFCCi as well as all of the individuals and businesses that have supported us over the years. Enjoy Myanmar: all That Matters.

Sincerely,

william (Billy) SeligCEo, new Crossroads asia

CEO, Co-Founder of NCRA

Sample Secto

r Report

For full report, contact NCRA at +95 1 122 1673 or information@newcrossroadsasia.com

Q1 sector Report now Available!

For full report, contact NCRA at +95 1 122 1673 or information@newcrossroadsasia.com

Sample Secto

r Report

For full report, contact NCRA at +95 1 122 1673 or information@newcrossroadsasia.com

Sample Secto

r Report

Sample Secto

r Report

Sample Secto

r Report